Classical music downloads spearhead changes in digital music pricing

A new recording of Beethoven’s piano sonatas released on Tuesday stands out for a few reasons. First, the young Korean pianist HJ Lim, who burst onto the classical music scene in 2009, has begun her recording career with a complete set of piano sonatas that most performers only approach later in their careers. (It’s not entirely complete, but almost; see my review of the set.) Second, this pianist takes a unique approach to Beethoven’s music, with tempi that are much faster than usual.

But perhaps the bigger news is the price: for a limited time, EMI is selling this 8-CD Beethoven: Complete Piano Sonatas set exclusively on the iTunes Store for the bargain price of only $10. With the same set due to be released on CD this week at more than $90, EMI’s slashing the download price suggests an interesting strategy, but also points out how flexible the price of music downloads can be.

EMI has put its marketing muscle behind this set, touting the performer and the recordings much more actively than with most of its classical releases. But in addition to the aggressive marketing, the agressive iTunes Store pricing nearly guarantees that this set will hit the top of the classical charts and stay there for a while. At the time of this writing, Lim’s Beethoven sonatas were number one in the classical charts, but have not yet reached the top 200 in overall “album” sales.

The presence of any album at or near the top of the charts guarantees that more people will notice it, and more are likely to buy it. And the fact that this is the equivalent of eight CDs for only $10 is an added incentive for those out to snag a bargain. To be fair, the description of the set doesn’t say how many discs it equates to, or the overall time of the set—nearly nine hours—but it does give the number of tracks: 99.

Interestingly, this is the number of tracks in many classical compilations one sees on the iTunes Store or on Amazon at the top of the charts; but these compilations are generally just $2 or $3. On Amazon, there are several “99” classical recordings in the top 10 downloads: 99 Must-Have Chillout Classics, The 99 Darkest Pieces Of Classical Music, and The 99 Most Essential Relaxing Classics. There are also a number of “100” sets: of Chopin, Tchaikovsky, Bach and Vivaldi. And iTunes has a lot of “50s” and “111s”.

The classical music market has a sort of hardcover/paperback strategy. New releases sell for premium prices, but shortly afterwards—sometimes a year or less, for major labels—the cost drops to a “budget” price. New releases are generally around $15 to $20, and budget discs are from $5 to $10. Unlike pop and rock music, where discs hit budget prices only after being available for many years, classical recordings drop quickly. When you want to hear Radiohead, say, you want to hear the band itself, not others playing the band’s music. With classical music, if you want to listen to Mozart, you have myriad options—he’s not really around to record his own music. So the competition is much stiffer, leading to lower prices.

But digital downloads change all of this. No longer do companies have to worry about the cost of physical products, inventory, and shipping. They are free to change prices whenever they want. While most of these classical compilations are licensed music—recordings from small labels that are licensed for pennies—even the major labels get into this game, albeit with slightly higher prices. For example, Ultimate Chopin from Decca, is available on the iTunes Store for $16. With 83 tracks, this is the equivalent of five CDs, featuring well-known performers. The super-budget sets at $2 or $3 generally (though not always) feature lesser performers, though when I look at some of these cheap sets, I see a number of familiar names.

All this underscores how flexible digital download pricing can be. Instead of the fixed $10 price for all albums, it’s possible to create a marketing coup (as with the release of HJ Lim’s Beethoven recordings) at a bargain-basement price. This attracts far more attention than releasing the set at full price, and the download price can be raised after the noise has subsided. As a result, EMI gets lots of publicity for its new exclusive artist, and sells far more units than if the release was at a “normal” price.

This type of pricing will become more common for other genres. Already, Amazon sells 100 albums a month at $5, in all genres, and even has a few dozen new releases at only $3. Dematerialized music, where there is no cost per unit, will increasingly lead to price flexibility, and it is consumers who will benefit.